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The banking industry remains in flux. 2021 introduced new challenges for traditional banks, from the added competition of digital-only entrants to shifting consumer banking behaviors and lingering fallout from the ongoing COVID-19 pandemic. However, there was one steadfast constant: the increased demand for digital banking experiences and rising digital expectations from consumers and businesses alike.
This year, an overwhelming amount of industry and media attention has been focused on sky-high neobank valuations, big tech’s continued foray into banking, and emerging finance trends, like buy-now-pay-later and the growing cryptocurrency market. All the while, traditional community financial institutions (FIs) have quietly served their local communities, playing an instrumental role in COVID-19 recovery and laying the foundation for nationwide resilience, starting with their local economies.
Community FIs are critical to maintaining competition and equity in the U.S. financial system. But their role can go overlooked in an industry that is constantly evolving and focused on bigger, faster, and shinier. We commissioned the 2021 Banking Impact Report to explore how banking trends are impacting local communities and the perceived role of community FIs.
In the report, we explore the role community banks and credit unions play in enabling nationwide resilience, the growing digital transformation gap, and digital transformation predictions and threats for 2022.
What we found is that community FIs are widely championed by consumers and small business owners (SBOs) as drivers of economic mobility, financial inclusion, and access to financial services. The report findings underscore the resilience of the traditional banking model in generating trust and delivering personalized service but foreshadow how rising digital expectations among consumers and SBOs might eclipse other banking needs.
For community FIs that have fallen behind the digital transformation curve, the opportunity cost of not modernizing is now a matter of survival.
- 78% of bank executives think a housing market crash is likely in the next five years
- 61% of bank executives observed an increase in fraudulent activity with accounts held at neobanks in the past 12 months
- 48% of consumers and 50% of SBOs are likely to open an account at a community FI in the next 12 months
- 44% of consumers and 57% of businesses expect online account opening from their FI
Looking ahead to 2022, community FIs must prioritize meeting consumers and businesses where they want to bank—whether in-branch, online, or in the field. Community banks and credit unions that recognize these massive industry shifts and digitize accordingly will be in a better position to future-proof their institutions, connect with new audiences and reinvest in the long-term resilience of the communities they serve.
Download the report to read our findings on:
- Which advanced banking features are expected by consumers and SBOs in 2022
- How the problem of legacy infrastructure is challenging community FIs
- The growing importance of financial inclusion
- The account opening forecast for 2022, with insights into account opening expectations of consumers and SBOs in the next 12 months
- What the COVID-19 economic recovery has meant for community FIs